Standard Deduction

The standard deduction is the IRS's way of giving everyone a baseline tax break. It reduces your taxable income automatically without needing receipts or documentation.

2025 Standard Deduction Amounts:

• Single: $14,600
• Married Filing Jointly: $29,200
• Head of Household: $21,900
• Age 65+: Add $1,950 (single) or $1,550 (married)

How It Works: If you earn $60,000 and take the standard deduction:

• Taxable income: $60,000 - $14,600 = $45,400
• You only pay tax on $45,400

Standard vs. Itemized: You can either take the standard deduction OR itemize (claim specific expenses like mortgage interest, charitable donations, medical expenses). You pick whichever is higher.

Most People Take Standard: Since the Tax Cuts and Jobs Act (2017) doubled the standard deduction, 90% of taxpayers now use it instead of itemizing.

When to Itemize: Only if your deductible expenses exceed the standard deduction:

• Mortgage interest on a $400,000+ loan
• $15,000+ in charitable donations
• Major medical expenses (>7.5% of income)
• High state/local taxes (capped at $10,000)

Example:

• Mortgage interest: $12,000
• Charity: $3,000
• Medical: $2,000
• Total: $17,000 → Itemize ($2,400 more than standard)

Pro Tip: If you're close, bunch deductions into alternate years (double charity in one year) to maximize benefits.